Banks design new fees as overdraft rules approach

The good news for bank customers this summer: New federal rules should cut down on unexpected overdraft fees. The bad news: Banks are designing new fees to help make up for the surcharges they might lose.

Starting July 1, Wells Fargo & Co. is ending its free checking account. Bank of America Corp. is testing an array of account options and fees to be rolled out later this year. Other banks are expected to follow suit.

The new rules say that unless a bank has the customer’s permission, it cannot charge a fee to cover the customer’s debit card purchases or ATM withdrawals when there is not enough money in the account. Banks charge overdraft fees that can reach $35 per transaction for this service.

Only if customers make the effort to opt in will banks cover the overdrafts and levy the fees.

Overdraft services can help keep customers from missing payments or bouncing checks. But the fees have also become a big revenue source for banks. In recent years, the fees have drawn fire from consumer groups and lawmakers who call them excessive.

A Sandler O’Neill & Partners report last month said BofA, the nation’s biggest bank, could suffer the largest hit to revenue from a loss of overdraft charges -- about $2.2 billion per year at the high end. BofA had $119 billion in revenue last year.

Wells Fargo could lose $1.1 billion in revenue, the second-biggest hit, Sandler O’Neill said. It had revenue last year of $88 billion.

Greg McBride, senior financial analyst with Bankrate.com, said many banks probably would take a wait-and-see approach. A small percentage of customers incur most of the overdraft fees that banks charge. If these customers opt in, banks’ fees are unlikely to change much.